Percentage Of Toronto Condos Owned By Foreign Investors Is Very Low, Says CMHC

Business | December 17, 2014

Did you see this article in Tuesday’s Toronto Star?

Three of my blog readers emailed this to me, and it was making the rounds on social media all day yesterday, and still is today.

The bottom line, based on preliminary discussion, is that nobody believes the numbers that CMHC is feeding us.  Perhaps CMHC is no longer able to accurately monitor segments of this insanely hot and complicated real estate market, or perhaps they have a different definition of “foreign investors.”

The report that CMHC put out was comprehensive, but the facts and figures are being called into question.

Do you think that only 2.4% of Toronto condos are owned by “foreign investors?”


Sue Pigg is one of my favourite newspaper reporters, and not just when it comes to real estate.

She’s always topical, and is never “a day behind” when it comes to real estate stories, like so much of the media out there.  In fact, she’s often the first person to break a story, as was the case with these………interesting numbers released by CMHC on Tuesday.

Have a read of Sue’s article in full HERE.

Keeping in mind that Sue is a reporter who reports what’s provided, not a columnist who provides an opinion, I want to look at some of the sections of this article that many are calling into question, and wondering how CMHC does their “research,” and whether they are actually equipped with the right people and systems to delve into Toronto’s real estate market.



“For the first time, the Canada Mortgage and Housing Corporation has put a number on the percentage of condos across the country owned by foreign investors and says it’s highest in Toronto — at a mere 2.4 per cent.”

Okay, so CMHC is doing this “for the first time,” are they?

So there might be a steep learning curve here?

I think when we do something for the first time, we’re not quite as prepared or informed as we ought to be.  And I think we know from experience that when we do things a second time around, we do better than the first.

As I’ll show below, I think the CMHC royally messed this up on their first attempt.  Especially if after all their data-collecting and number-crunching, they think that only 2.4% of ALL Toronto condos are owned by foreign investors.



“The federal housing corporation asked condo corporations and property-management companies for 92,257 rental condos which of their units have owners with mailing addresses outside of Canada.”

Wait a second.

You’re telling me that the definition of “foreign ownership” is somebody who has a MAILING ADDRESS outside of Canada???

Yes, I just used three exclamation marks, which is usually reserved for a teenager writing a text message, since the idea of using mailing addresses outside of Canada to determine foreign ownership is something a child would do.

If you own a vacation property in Florida, you probably have a Florida address.  But alas, you’re a foreign owner!

I have a bank account at US Bank in Idaho, and I use that to pay my bills down there.  Does that make me a “resident” by some sort of backwards definition?

Holy moly.  Words can’t describe.

Have a read at the comments below the Toronto Star article, and you’ll see that even the average anonymous basement-dwelling commenter can come up with the idea of having a Canadian address, even if you live abroad.

And beyond that, how do we actually define “foreign investment?”

What if somebody living in China sends $3,000,000 over to Toronto to a family member, who then buys pre-construction condos in his or her name, and NOT the name of the resident of China?  Those units are “owned” by the Canadian resident, but the money came from abroad.  That money is the “investment,” in my opinion, and it doesn’t matter who is on title.

When I was a bar-back at a nightclub as a teenager, their system for counting the number of bottles of beer sold in a night was to count the empties that had been stacked into boxes.  This discounted any bottles which were broken, put into the garbage, and left in the bathrooms or coat check and tossed elsewhere.  I wondered why they didn’t, you know, just count the bottles as they sold them!

That was a simple solution, and the solution for counting “foreign-owned condos” isn’t as simple.  But clearly, counting Canadian mailboxes isn’t the answer.



“That number proved to be especially high in condo buildings close to post-secondary institutions such as the University of Toronto and Ryerson University where many overseas families like to send their children, CMHC researchers found.”

I might also add, “That number proved to be especially high in ANY condominium in the downtown core which is less than three years old.”

Foreign investors LOVE pre-construction condos, since it’s a good way to park money that they don’t want sitting in a bank in an unstable political climate, that may also have a rate of inflation that’s five times the rate of interest.

There are certain buildings in the downtown core which are potentially more than 50% owned by foreign investors.



“Even as some 14,000 to 15,000 new condos came on stream across the GTA this year — and some 29 per cent of them were put up for rent — Toronto’s downtown vacancy rate dropped from a historic low of 1.6 per cent last year to just 1.1 per cent this year, the survey found.”

I’d like to know where that 29% figure comes from.

What source does CMHC have for a unit “being put up for rent?”

Is this according to property managers?  Because we know how silly those numbers are.  When I see a condominium’s Status Certificate, and it says, “According to property management, 24 of 312 units were leased in 2013,” I usually double that number if it’s in a newer building, since very few owner/landlords walk down to property management’s office and hand in a copy of the lease, like they’re supposed to.

In any event, I’m more surprised to see that the vacancy rate dropped, since I found this to be a soft year for the rental market.  I found that most people were buying instead, given how low interest rates are, and would-be renters want to catch a piece of this seemingly never-ending real estate uptick.

I’m not alone in my feelings on the rental market, as this has been a point much discussed with my colleagues.  I had trouble with several rental listings this year, and several of them were listings I’ve leased in previous years with no issues.

Perhaps the “drop in vacancy” is because a larger percentage of units, specifically those owned by foreign investors, are being deliberately kept vacant, and thus they don’t count in the statistic?


“We’re more bullish on rental demand than we are on ownership demand going forward. That’s great news for investors and the condo market,” says Tsiakopoulos.

Agree to disagree.

As I said above, I found the rental market to be slow this year, despite whatever numbers you can provide to the contrary.

And since when is CMHC a real estate cheerleader?  “That’s great news for investors and the condo market,” is it?  How about putting that on a large piece of bristol board and bringing it to a Leafs game to show to the TV cameras?



“About 34,000 new households a year are created in Toronto through immigration and in-migration from other provinces — something that’s also likely to increase as slumping oil prices impact the Western economy. Of those, about 11,000 are renters, Tsiakopoulos says.”

This is the second-most interesting statistic of the CMHC report, after their questionable 2.4% foreign-ownership figure, of course.

34,000 new households are created in Toronto each year!

And suddenly, the idea of 20,000 new condos coming onto the market doesn’t sound like saturation, does it?

I remember TREB’s Jason Mercer telling the Condo Committee, back in perhaps, 2009, that “The city can’t build fast enough to satisfy net migration, and that’s not going to change.”  He added that this would put upward pressure on condo prices.  I remember being astounded by that notion at the time, since the downtown core was one giant construction zone.

But Jason’s prophecy proved correct, as condo prices have risen steadily since then, and the supply still hasn’t caught up to demand, despite the idea of there being six construction cranes in view no matter which direction you look.



“The percentage of foreign ownership has become a key question in the industry – housing watchers largely believe the figure is closer to 5 per cent rather than CMHC’s 2.4 per cent – over fears that if the market turns, foreign owners will be more likely to put their units up for sale and flood the market.”

Good on the reporter, Sue Pigg, for adding in the idea that maybe, just maybe, the 2.4% number is low.

I spoke to Sue on Tuesday, and I told her that I think the number could be as high as 8-10%.

That’s a LOT, considering foreign investors won’t, and don’t, own any condos in buildings older than ten years old.  So 0.00% of all those condos built in the 1970’s, 1980’s, and 1990’s are “owned by foreign investors.”

But as I said above, some buildings are owned 50% or more by foreign investors, and a large majority of downtown Toronto condos were constructed after 2000, so I have to think the number of foreign-owned units is upwards of 10%.

A brief discussion in my office in Tuesday had people suggesting as high as 20%, for what it’s worth.

Although perhaps the bigger question is: what percentage of NEW condominiums are owned by foreign investors?

That’s where the real estate bears, doomsdayers, and alarmists will feast off the data, and point out that the massive “correction” is just around the corner.


So whether you have an informed opinion, or just a thought on the matter, what do you think the percentage of foreign-owned condo units is in Toronto?

That’s “Toronto,” and not “downtown,” which is why that 2.4% number must seem low.

I spoke to an economist today who said, “The number is low, but the true number likely isn’t multiples of that number.”

Based on my gut feeling, I have to disagree.  6 per cent?  7 per cent?  Or are we upwards of 10% at this point?

I welcome your estimates and guesstimates, and unlike CMHC, you don’t have to put them in a report…

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  1. Appraiser

    at 8:16 am

    I find the entire issue of foreign ownership of condominiums a huge and fruitless excercise in “who-really-gives-a-shit.”

    The supposition that foreign owners would flood the market with listings in a market downturn is patently unproveable, and appears by all accounts to be yet another invention by the bears to “prove” that they’ve been right all along…about something.

  2. Kyle

    at 10:19 am

    100% agree. Whether the foreign ownership is 2.4% or 24% is moot. This delusional notion that foreign owners will sell en masse at some point is completely predicated on a bunch of unfounded assertions. Like all the bear theories which have been proven time and again to be pure bunk, this is just another example of people obstinately trying to shape reality to fit their beliefs, rather than shaping their beliefs to fit reality.

    David hit the nail on the head, when he said this, “34,000 new households are created in Toronto each year! And suddenly, the idea of 20,000 new condos coming onto the market doesn’t sound like saturation, does it?” It doesn’t matter who owns those rental units, what matters is demand for housing is growing faster than supply – full stop.

    For those that actually want real analysis based on supportable data, here’s a well written piece by an excellent Real Estate Analyst on how to educate yourself about the market:

    1. Georegyboy

      at 2:45 am

      You know Ben Myers works for the developer? Does it come any more biased than this?

      Does Kyle work for TREB?

      1. Kyle

        at 9:47 am

        “Does it come any more biased than this?”

        Sure there are many so called experts that are more biased than this, such as Financial Planner Garth Turner, who encourages people to put their money with a Financial Planner instead of into a house, or the pretend Economists that make their living selling a doom and gloom narrative whom have a track record so bad that, a flipped coin would wipe the floor with them.

        If you actually read Ben’s posts instead of simply dismissing it as some bias real estate con job, you’d see that he is transparent (unlike the aforementioned Financial Planner) about what he does and that he could be adding a positive spin, and he encourages people to take in everything with a grain of salt and challenge their beliefs.

        No i don’t work for TREB, i don’t even work in real estate, but i have done very well from buying it.

  3. Libertarian

    at 11:09 am

    David – saw your video on the Globe & Mail with Rob Carrick. Some balanced commentary in that video. But it seems that this CHMC report stole the spotlight.

    1. David Fleming

      at 9:41 pm

      @ LIbertarian

      I try not to be a real estate cheerleader like most Realtors, so I was fully open to a discussion of both the pros and cons of a young person buying a condo. Rob’s good at poking the bee hive a little bit!

  4. Joe Q.

    at 1:19 am

    This report from the CMHC reminds me of their rental vacancy research. They (understandably) want to fill gaps in the housing-market data landscape, but have a limited set of tools at their disposal. So they are forced to make assumptions (in this case, using mailing addresses as a proxy for residency status) that simplify data collection, but are likely to skew the results in a significant way.

    Their findings can still be useful IF the assumptions they’ve made are kept in mind, but my experience is that the CMHC research is reported in the media without such qualifications; the end result may harm more than it helps.

    As for the value of this research, I think that trying to get more insight into the extent of foreign ownership is worthwhile — it gives a window onto the extent to which Toronto prices are affected by income earned outside of Toronto. Hardly a fruitless exercise.

    1. Appraiser

      at 7:32 am

      Hey Joe Q. are you concerned about the influence on prices that Canadian buyers of real estate are having in Arizona or Florida?

      1. Joe Q.

        at 8:05 pm

        Appraiser: I’m sure I would be if I lived and worked in Arizona or Florida, and had a personal interest in the long-term economic health of those regions.

  5. Uoguelph real estate

    at 12:09 pm

    The most interesting comment is the immigration one and is the largest factor behind the difference of opinions to whether a drastic correction is coming. If you look at the real estate market of some of the major cities in the world for example New York, Chicago and london (cities with bodies of water to force vertical growth) to name a few and you track their immigration patterns of growth, paralell to real estate prices and development. Toronto reflects the same thing an influx of people settling in the GTA and toronto core continue to fuel the market. With the majority of most new immigrants settling in Vancouver, Montreal and Toronto, with a small splash living in Alberta because of the booming economy out there, there is evidence to support a hot market in Toronto. With that said, outside of immigration statistics the condo market is overheated and if you don’t believe that you haven’t looked closely at historically low interest rates and extremely high consumer debt ratios. As for foreign money, toronto is filled with it, we believe we’re a mosaic of multiculturalism. So 2.4 percent with mailing addresses outside of Canada is great factoring in that we have many pundits that believe the actual number is double digits (in regards to total foreign investment). I say it’s great because the other debatable 6 percent or so have a real interest in toronto and for good reason (canada was viewed as having one of the safest financial sectors in the world after the 2008 financial crisis by the economist and Wall Street journal). Truthfully look at Vancouver housing prices we have more people in Toronto and still don’t have average house prices like their’s and foreign investment in Vancouver is through the roof. This foreign investment is a lot to do with nothing seeing that so many immigratants genuinely support toronto and have put their money here.

    Last off topic remark, I sat in a room at TREB yesterday listening to active real estate agents speak and the level of inaptitude amoung realtors is disgusting. Their lack of overall education and foresight about factors relating to real estate explains why consumer despise the industry. It’s a bunch of commission hungry people playing with one of the largest financial transactions a person will undertake. I truly respect the writer of this blog who has educated himself about business and being an alum of a great university in Mac. Being a graduate of Guelph in their commerce and real estate program I wish their were more industry “consultants” of his calibre and less hungry real estate sales people.

  6. Potato

    at 2:08 pm

    “That’s where the real estate bears, doomsdayers, and alarmists will feast off the data, and point out that the massive “correction” is just around the corner.”

    Part of why I don’t really care about getting a precise read of foreign ownership is that no one can agree what the effect of it is in the first place. Here you imply it’s a negative, and there’s certainly that case to be made: momentum speculators could bail in large numbers when the momentum stops, exacerbating a soft landing into a full crash; or it opens the market up to external shocks so that banking reforms in China are somehow linked to property in Canada; or changes in the exchange rate can lead to big swings in how these foreign buyers see the value in the city (e.g., with the big drop over the past year in the CAD, many foreign buyers are facing paper losses even with a market that keeps defying gravity); and of course, the debt is there for local buyers, so if the foreign fraction is indeed high it suggests we’re even more critically indebted.

    On the other hand, bulls will say that the presence of foreign buyers means that Toronto is a “global city” and so deserves a premium valuation, or even that fundamentals don’t apply at all: local rents and incomes are irrelevant when it’s mostly “hot money” setting the prices.

    It’s a side-show either way.

  7. TOGuy

    at 3:17 pm

    This appears to be another example of people pursuing the notion that the Toronto real estate market is doomed. We seem to hear the same regurgitated rhetoric year after year and yet, the market still seems as strong as ever.

  8. Kyle

    at 9:21 am

    From what i see going on in Toronto, i think most foreign owners can be divided into two categories:

    1. Foreign non-investors who are buying as part of their long-term plan to become permanent residents. An example would be along Yonge Street between Sheppard and Finch, where there are literally thousands of units that would fall into this category. And i think this by far makes up the largest portion of foreign owners.

    2. Foreign investors who are buying as a pure investment. I see mostly larger, sophisticated players doing this. Obviously foreign real estate investment requires a lot more knowledge of taxes (both local and home), regulatory, property management and economics. Despite the bears’ mythical image of amateur foreign investors being duped into buying up swaths of undesirable units from floor plans, i think the actual number of individual foreign investors buying as a pure investment is vanishingly small. Who i do see buying as an investment are the larger sophisticated investors, such as the Private Equity fund that purchased the entire Selby project in pre-construction last month.

    Both categories of foreign owners in my view represent far less risk (i.e. they tend to be better funded), and tend to have longer holding periods than the typical local end user, so IMO the higher the number of foreign owners the MORE stability there actually is in the market

    1. Georegyboy

      at 2:43 am

      Could you run the ROI that an investor would make on buying downtown condos and then renting them out at the current interest environment?

      Then, could you do the same calculation at 4-5% interest rate?

      How about after tax ROI?

      How about 0% leverage, which is what a fund would do?

      You could probably get a better and move favorably taxable yield on gov’t bonds.

      1. Kyle

        at 9:58 am

        Do you even have the slightest clue what you’re talking about?
        “Then, could you do the same calculation at 4-5% interest rate?”
        “How about 0% leverage, which is what a fund would do?”

        If someone is buying 0% leverage, then 4-5% interest rate does not affect their ROI. Furthermore, the return profile of real estate changes over time, any analysis should be long term in nature. If there is leverage mortgage and principal costs tend to be flat and will only fluctuate within a range based on interest rates. Meanwhile revenues tend to rise over time with a high degree of certainty and historically greater than inflation, and equity tends to rise over time with a high degree of certainty, again historically greater than the rate of inflation. Which leads to improving performance each year. Buying and holding a gov’t bond, does not do that.

  9. Fuckyou

    at 4:52 pm

    Fuck Toronto.
    Fuck Chinese-owned condos and real estate here.

    I’m going back to the third world to get rich. High-school dropouts and trannies can stay in Toronto.

    I don’t see you as human beings, only dollar signs.

    Come at me.

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